We are entering into an extreme dangerous zone for shorts. Whenever BTCUSDLONGS v SHORTS gets under 1 (more shorts than longs) the chance of a major short squeeze grows rapidly. When the ratio gets to between .6 to .8 the squeeze is virtually imminent, and it is often violent.
We are currently at .62, which is effectively the all time low.
The reason why this occurs:
1. Retail traders are "herding" into the position (major behavioral bias). They are generally weaker hands and will close at the first sign of trouble 2. Bears run out of juice. There is nobody left to sell
Actually, Bulls have run out of pain to sell off. Bears are really not the cause of major declines. If there is enough "dip buy bulls" then they will always soak up way past what any short can do. what you meant to say was, Shorts are at an all time high and in doing so at this stage of the stall means there are no more sell off bulls for the shorts to work with but there are also no more more "dip buy bulls" either. So, what will happen as in all market correction, the Hero- THE BEAR- will start to cover from bull exhaustion above and side line sissy longs from the side waiting to get in growing in interest. Bears as they cover will slope the bottom pin stick it AND give said sissy bulls the signal it is time to get in. It is not bulls who start runs or save runs.
It is bears and the action of bears deciding equilibrium between dip buy bull buyers and supply overhead bull sellers has completed. If Bears did not have open shorts and take trades then bull cycles would languish terribly as bottom buy bulls are always sissys and need conformation with volume that it is time. and that is done either by
1. Retail accumulation slow and low in Phase 1.1-1.3 of market structure. OR-
2. Where as huge amounts of shorts giving you wusses a signal and the volume to be brave are in fact what really make markets work in the later phases of market cycle in 2.2 and on to 4.1 and down to the tail end of 4.3 before Phase 1.1 starts up again.
Bulls are always idiots and destroy the run as well -NOT BEARS. Bears just get short when the ask gets heavy and go for the ride with profit taking bulls as the ask gets heavy. Bears alone cant destroy a run because if the bull was strong then the first level of pull back would be soaked by well, more bulls hahahahaha.
So, I give you, "The BEAR" The hero of the market, savior of idiotic bulls!
-SS-
P.S seller exhaustion is almost complete and yes, Shorts will start to cover and it will let those wusses get on the train to over head test town at 5-6k but that does not mean the bottom is in or trend fully changed, just means it is going to test overhead res. when it gets there we will re evaluate where the bulls head is at and what they are willing to pay. but any bulls who buy now in the 3k range will be pretty tempted to sell for 100% gains at the 6k test and may cause enough congestion to scare off chaser bulls and signal to bears it is going to swing the other way to test support.
SpawnyXBT
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No violence so far :)
TaaviK
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Question:
The Bitfinex Shorts/Longs chart does not cover the bear market of 2014-2015. It does however cover the end stages of the 2 year mega Bull run. The very end of the Bull market shows a very strong bias towards longs, peaking at ~3.8x against shorts. Based on that IF the bear market does continue, do you recon there could develop a much more severe bias towards more Short positions or do you think the 0.6 level is probably already as low as it can go?
It is bears and the action of bears deciding equilibrium between dip buy bull buyers and supply overhead bull sellers has completed. If Bears did not have open shorts and take trades then bull cycles would languish terribly as bottom buy bulls are always sissys and need conformation with volume that it is time. and that is done either by
1. Retail accumulation slow and low in Phase 1.1-1.3 of market structure. OR-
2. Where as huge amounts of shorts giving you wusses a signal and the volume to be brave are in fact what really make markets work in the later phases of market cycle in 2.2 and on to 4.1 and down to the tail end of 4.3 before Phase 1.1 starts up again.
Bulls are always idiots and destroy the run as well -NOT BEARS. Bears just get short when the ask gets heavy and go for the ride with profit taking bulls as the ask gets heavy. Bears alone cant destroy a run because if the bull was strong then the first level of pull back would be soaked by well, more bulls hahahahaha.
So, I give you, "The BEAR" The hero of the market, savior of idiotic bulls!
-SS-
P.S seller exhaustion is almost complete and yes, Shorts will start to cover and it will let those wusses get on the train to over head test town at 5-6k but that does not mean the bottom is in or trend fully changed, just means it is going to test overhead res. when it gets there we will re evaluate where the bulls head is at and what they are willing to pay. but any bulls who buy now in the 3k range will be pretty tempted to sell for 100% gains at the 6k test and may cause enough congestion to scare off chaser bulls and signal to bears it is going to swing the other way to test support.